Exhibit 10.3


 


ASSET PURCHASE AGREEMENT


 


AMONG


 


NEENAH
PAPER COMPANY OF CANADA


 


As
Seller


 


And


 


AZURE
MOUNTAIN CAPITAL FINANCIAL CORPORATION


 


As
Purchaser


 


MADE AS
OF


 


June 24,
2008


 


	
   

  
	
  PICTOU PULP MILL WORKING CAPITAL ASSETS

  
	
   

  



 

















 


TABLE OF CONTENTS


 


	
  Article 1 – INTERPRETATION

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
  1

  
	
  1.2

  	
  Headings

  	
  3

  
	
  1.3

  	
  Extended Meanings

  	
  3

  
	
  1.4

  	
  Statutory References

  	
  4

  
	
  1.5

  	
  Accounting Principles

  	
  4

  
	
  1.6

  	
  Currency, Prices and Values

  	
  4

  
	
  1.7

  	
  Schedules

  	
  4

  
	
   

  	
   

  	
   

  
	
  Article 2 – SALE AND PURCHASE

  	
  5

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Assets to be Sold and Purchased

  	
  5

  
	
  2.2

  	
  Retained Liabilities

  	
  5

  
	
  2.3

  	
  Purchase Price

  	
  5

  
	
  2.4

  	
  Purchase Price Adjustment

  	
  5

  
	
  2.5

  	
  Allocation of Purchase Price; Taxes

  	
  8

  
	
  2.6

  	
  Section 85 Election

  	
  9

  
	
  2.7

  	
  Instruments of Conveyance

  	
  9

  
	
   

  	
   

  	
   

  
	
  Article 3 – REPRESENTATIONS AND WARRANTIES

  	
  9

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Seller’s Representations and Warranties

  	
  9

  
	
  3.2

  	
  Survival of Seller’s Representations, Warranties and
  Covenants

  	
  12

  
	
  3.3

  	
  Purchaser’s Representations and Warranties

  	
  13

  
	
  3.4

  	
  Survival of Purchaser’s Representations, Warranties and
  Covenants

  	
  14

  
	
   

  	
   

  	
   

  
	
  Article 4 – COVENANTS

  	
  14

  
	
   

  	
   

  
	
  4.1

  	
  Governmental Filings

  	
  14

  
	
  4.2

  	
  Expenses

  	
  14

  
	
  4.3

  	
  Indemnification for Brokerage Commissions

  	
  15

  
	
  4.4

  	
  Further Assurances

  	
  15

  
	
  4.5

  	
  Use of Seller’s Trade Name

  	
  15

  
	
  4.6

  	
  Money Received After Closing

  	
  15

  
	
   

  	
   

  	
   

  
	
  Article 5 – CLOSING ARRANGEMENTS

  	
  16

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Closing

  	
  16

  
	
   

  	
   

  	
   

  
	
  Article 6 – GENERAL

  	
  16

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Time of the Essence

  	
  16

  
	
  6.2

  	
  Public Announcements

  	
  16

  
	
  6.3

  	
  Benefit of the Agreement

  	
  16

  
	
  6.4

  	
  Third Party Beneficiaries

  	
  16

  



 

















 


	
  6.5

  	
  Entire Agreement

  	
  16

  
	
  6.6

  	
  Amendments and Waivers

  	
  17

  
	
  6.7

  	
  Assignment

  	
  17

  
	
  6.8

  	
  Notices

  	
  17

  
	
  6.9

  	
  Remedies Cumulative

  	
  18

  
	
  6.10

  	
  Governing Law

  	
  18

  
	
  6.11

  	
  Attornment

  	
  18

  
	
  6.12

  	
  Counterparts

  	
  18

  



 

















 


ASSET PURCHASE AGREEMENT


 


THIS AGREEMENT is made as of June 24, 2008, between NEENAH PAPER
COMPANY OF CANADA, an unlimited company incorporated under the laws of Nova
Scotia (“Seller”) and AZURE MOUNTAIN CAPITAL
FINANCIAL CORPORATION, an unlimited company incorporated under the laws of Nova
Scotia (“Purchaser”).


 


PRELIMINARY STATEMENT


 


Purchaser desires
to purchase, and Seller desires to sell, the Assets (as defined herein)
relating to the business conducted by Seller at and only with respect to its
Pictou County, Nova Scotia pulp mill (the “Pictou Pulp Mill”
or the “Pulp Business”), for the consideration
set forth below, subject to the terms and conditions of this Agreement.


 


NOW
THEREFORE, in consideration of the premises and the covenants
and agreements herein contained, the parties hereto agree as follows:


 


ARTICLE 1 – INTERPRETATION


 


1.1          Definitions


 


In this
Agreement, unless something in the subject matter or context is inconsistent
therewith, the following terms shall have the respective meanings set out below
and grammatical variations of such terms shall have corresponding meanings:


 


“Affiliate” means, with respect to any
Person, any other Person directly or indirectly controlling, controlled by or
under common control with, such Person, and for these purposes “control” is the
power whether by contract or ownership of equity interests or otherwise to
select a majority of the board of directors or other supervisory management
authority of an Entity, whether directly or indirectly through a chain of
Entities that are “controlled” within the foregoing meaning; provided, however,
that for purposes of this Agreement, Seller and Purchaser shall be deemed not
to be Affiliates of each other;


 


“Agreement” means this asset purchase
agreement including the Preliminary Statement and Schedules to this agreement,
as amended, supplemented or restated from time to time;


 


“Applicable Law” means any applicable
domestic or foreign, federal, provincial or local law, including any statute or
subordinate legislation or treaty and any applicable rule, regulation,
ordinance, requirement, order, Permit, judgment, injunction, award or decree or
other binding requirement of a Governmental Authority having the force of law;


 


“Assets” has the meaning set out in Section 2.1;


 


“Business Day” means a day other than a
Saturday, Sunday or statutory holiday in New York, New York, Atlanta, Georgia
or Halifax, Nova Scotia;


 


“Closing” means the closing of the
transactions contemplated hereby;


 


1

















 


“Closing Date” means the date hereof;


 


“Contract” means any agreement,
indenture, contract, lease, deed of trust, licence, option, instrument or other
commitment, whether written or oral;


 


“Entity” means a Person other than an
individual;


 


“GAAP” has the meaning set out in Section 1.5;


 


“Governmental Authority” means any
domestic or foreign, federal, provincial, municipal, local or other governmental,
quasi-governmental, legislative, executive, judicial or administrative body or
person having jurisdiction in the relevant circumstances, including any
governmental ministry, agency, branch, department, commission, board, tribunal,
bureau or arbitrator;


 


“Issued Shares” has the meaning set out
in Section 2.3(a);


 


“knowledge”, with respect to Seller,
means the actual knowledge, after due enquiry, of any of the Persons listed on
Schedule 1.1(a);


 


“lien or other encumbrance” or “Encumbrance” means any lien, pledge, hypothec, mortgage,
security interest of any nature, adverse claim, reservation, easement, title
retention agreement, claim, lease, charge, option, right of first refusal,
easement, servitude, transfer restriction under any shareholder or similar
agreement, encumbrance or any other restriction or limitation whatsoever, or
any Contract to create any of the foregoing;


 


“Losses” means all fines, losses,
liabilities, damages, deficiencies, costs or expenses (including interest,
legal fees and disbursements of legal counsel) arising directly or indirectly
as a consequence of such matter;


 


“Material Adverse Change” and “Material Adverse Effect” mean any event, change or effect
that, when taken individually or together with all other adverse effects, will
or is reasonably likely to have a materially adverse effect on the business,
affairs, capitalization, assets, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Pulp Business, taken as a whole;
provided, however, that effects or changes relating to:


 


(a)                                  changes
in general political and economic conditions and changes affecting generally
the industries and markets in which the Pulp Business is conducted that, in any
of the foregoing cases, do not affect the Pulp Business, taken as a whole, in a
disproportionate manner relative to other participants in the same industry as
the Pulp Business;


 


(b)                                 the
effect of any changes in applicable laws, regulations or accounting rules; and


 


(c)                                  the
fact of the pendency of the transactions contemplated by this Agreement and the
identity of Purchaser;


 


2

















 


are not Material Adverse Changes or Material Adverse Effects and are
not to be taken into account in determining whether a Material Adverse Change
or a Material Adverse Effect has occurred;


 


“Person” means any individual,
corporation, company, unlimited liability company, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Authority or other legal or business entity however designated or
constituted;


 


“Pictou Pulp Mill” has the meaning set
out in the Preliminary Statement;


 


“Pulp Business” has the meaning set out
in the Preliminary Statement;


 


“Purchase Price” has the meaning set out
in Section 2.3;


 


“Purchaser” has the meaning set out on Page 2;


 


“Seller” has the meaning set out on Page 2;


 


“Taxes” means any federal, provincial,
local or foreign, income, capital, branch, goods and services, valued added,
harmonized sales, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or add-on minimum, ad valorem, or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, imposed by any Governmental Authority;
provided, however, that in no event shall Taxes be deemed to include any
transfer tax or capital gains tax payable in connection with the purchase and
sale of the Assets; and


 


“Time of Closing” means 10:15 a.m.
in Nova Scotia on the Closing Date, with an effective Time of Closing for
accounting purposes of 12:01 a.m. in Nova Scotia on the Closing Date.


 


1.2                               Headings


 


The division of
this Agreement into articles and sections and the insertion of a table of
contents and headings are for convenience of reference only and are not to
affect the construction or interpretation of this Agreement.  The terms “hereof”, “hereunder” and similar
expressions refer to this Agreement and not to any particular Article, Section or
other portion hereof.  Unless something
in the subject matter or context is inconsistent therewith, references herein
to Articles and Sections are to Articles and Sections of this Agreement.


 


1.3                               Extended
Meanings


 


In this Agreement
words importing the singular number only include the plural and vice versa and words importing any gender include all
genders.  Unless something in the subject
matter or context is inconsistent therewith, the term “including” means “including
without limiting the generality of the foregoing”.


 


3

















 


1.4                               Statutory
References


 


Unless something
in the subject matter or context is inconsistent therewith and except with
respect to Environmental Laws, each reference to any statute refers to that
statute and to the regulations made under that statute, as now enacted or as
the same may from time to time be amended, re-enacted or replaced.


 


1.5                               Accounting
Principles


 


Wherever in this
Agreement reference is made to a calculation to be made or an action to be
taken in accordance with generally accepted accounting principles, such
reference will be deemed to be to the generally accepted accounting principles
in the United States from time to time (“GAAP”),
applicable as at the date on which such calculation or action is made or taken
or required to be made or taken.


 


1.6                               Currency,
Prices and Values


 


All references to
currency, prices and values (monetary, accounting, financial or otherwise)
herein are to lawful currency of Canada unless otherwise specified.


 


1.7                               Schedules


 


(a)           The
following Schedules are attached to and form part of this Agreement:


 


	
   

  	
  Schedule

  	
   

  	
  Contents

  
	
   

  	
  Schedule 1.1(a)

  	
  -

  	
  Knowledge of
  Certain Persons

  
	
   

  	
  Schedule 2.5

  	
  -

  	
  Allocation of
  Purchase Price

  
	
   

  	
  Schedule 2.6

  	
  -

  	
  Section 85(1) Tax
  Election Amounts

  
	
   

  	
  Schedule 3.1(c)

  	
  -

  	
  Compliance with
  Laws

  
	
   

  	
  Schedule 3.1(e)

  	
  -

  	
  Actions and
  Proceedings

  
	
   

  	
  Schedule 3.1(j)

  	
  -

  	
  Location of
  Assets

  
	
   

  	
  Schedule 3.1(m)

  	
  -

  	
  Insurance
  Policies

  



 






* The schedules listed above have been omitted in accordance with Item
601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish
to the Securities and Exchange Commission a copy of any omitted exhibits or
schedules upon supplemental request.


 


(b)           Any
matter disclosed on any of the Schedules hereto shall be deemed to be disclosed
on each other Schedule hereto relating to such matters.


 


4

















 


ARTICLE 2 – SALE AND PURCHASE


 


2.1                               Assets
to be Sold and Purchased


 


Seller hereby
sells, assigns, transfers, conveys and delivers to Purchaser, as of the Time of
Closing, the following current assets of Seller relating to the Pulp Business:


 


(a)                                  the
trade receivables of the Pulp Business as reflected in Seller’s general ledger
accounts numbers 000-0321 and 000-0321-100; and


 


(b)                                 the
hardwood pulp inventory and the softwood pulp inventory of the Pulp Business as
reflected in Seller’s general ledger accounts numbers 000-0631 and 000-0633,
respectively.


 


All of the
foregoing assets and properties being sold, assigned, transferred, conveyed and
delivered to Purchaser hereunder are hereinafter referred to as the “Assets”.


 


2.2                               Retained
Liabilities


 


Notwithstanding
anything to the contrary contained herein, Purchaser shall not hereby assume,
or in any way be liable or responsible for, any liabilities or obligations of
Seller.


 


2.3                               Purchase
Price


 


Subject to the
adjustments contemplated in Section 2.4, the aggregate purchase price (the
“Purchase Price”) payable by Purchaser
to Seller for the Assets shall be $41,993,380, which shall be satisfied as
follows:


 


(a)                                  the
issuance by Purchaser to Seller of 41,993,380 no par value common shares of
Purchaser (the “Issued Shares”) represented by
share certificate no. NPV-1
registered in the name of Seller, the receipt of which is hereby acknowledged
by Seller; and


 


(b)                                 all
purchase price adjustments pursuant to Section 2.4 shall be satisfied by
payment of cash as specified in Section 2.4.


 


2.4                               Purchase
Price Adjustment


 


(a)           The
Purchase Price shall be adjusted as set forth in this Section 2.4.


 


(b)           At
the Time of Closing, Seller shall provide to Purchaser a complete list of the
receivables referred to in Section 2.1(a) (the “Closing Date
Receivables List”).  The
aggregate amount of the receivables listed in the Closing Date Receivables List
is referred to as the “Closing Date Receivables
Amount”.


 


(i)             If
the Closing Date Receivables Amount is less than $28,086,792 (the “Target Receivables Amount”), the Purchase Price shall be
decreased by an amount (the “Purchase Price Receivables
Reduction Amount”) equal 


 


5

















 


to the difference
between the Target Receivables Amount and the Closing Date Receivables Amount,
and Seller shall immediately thereafter pay to Purchaser in immediately
available funds the Purchase Price Receivables Reduction Amount.


 


(ii)          If
the Closing Date Receivables Amount is greater than the Target Receivables
Amount, the Purchase Price shall be increased by an amount (the “Purchase Price Receivables Increase Amount”) equal to the
difference between the Closing Date Receivables Amount and the Target
Receivables Amount, and Purchaser shall immediately after the Closing pay to
Seller in immediately available funds the Purchase Price Receivables Increase
Amount.


 


(c)           At
the Time of Closing, Seller shall provide to Purchaser a reasonable estimate of
the aggregate value of the inventories referred to in Section 2.1(b) (the
“Closing Date Inventories Estimate”).


 


(i)             If
the Closing Date Inventories Estimate is less than $9,333,265 (the “Target Inventories Amount”), the Purchase Price shall be
decreased by an amount (the “Purchase Price Inventories
Reduction Amount”) equal to the difference between the Target
Inventories Amount and the Closing Date Inventories Estimate, and Seller shall
immediately thereafter pay to Purchaser in immediately available funds the
Purchase Price Inventories Reduction Amount.


 


(ii)          If
the Closing Date Inventories Estimate is greater than the Target Inventories
Amount, the Purchase Price shall be increased by an amount (the “Purchase Price Inventories Increase Amount”) equal to the
difference between the Closing Date Inventories Estimate and the Target
Inventories Amount, and Purchaser shall immediately after the Closing pay to
Seller in immediately available funds the Purchase Price Inventories Increase
Amount.


 


(d)           For
purposes of Section 2.4(d), if the difference between (x) the sum of
the Purchase Price Receivables Reduction Amount and the Purchase Price
Inventories Reduction Amount, minus (y) the Purchase Price Receivables
Increase Amount and the Purchase Price Inventories Increase Amount is a
positive amount, such amount is referred to as the “Seller
Closing Payment”; and if the difference is a negative amount, the
absolute value thereof shall be referred to as the “Purchaser
Closing Payment”.


 


Not later than 30 calendar days following the Closing Date, Purchaser
will prepare and deliver to Seller a calculation of the value of the Assets as
of the Closing Date (the “Final Net Working Capital”)
in accordance with GAAP applied in a manner consistent with Seller’s historic
practices.  The “Target Net
Working Capital” is an amount equal to $37,420,057.


 


(i)             If
the Final Net Working Capital is less than:


 


6

















 


(A)                              the
Target Net Working Capital minus the Seller Closing Payment, or


 


(B)                                the
Target Net Working Capital plus the Purchaser Closing Payment,


 


the Purchase Price shall be decreased by an
amount (the “Purchase Price Reduction Amount”)
equal to:


 


(I)            in
the case of clause (A), (x) the Target Net Working Capital minus (y) the
sum of the Final Net Working Capital plus the Seller Closing Payment, or


 


(II)        in
the case of clause (B), (x) the Target Net Working Capital minus (y) the
difference between the Final Net Working Capital minus the Purchaser Closing
Payment,


 


and Seller shall, on the Final
Determination Date, pay to Purchaser in immediately available funds the
Purchase Price Reduction Amount.


 


(ii)          If
the Final Net Working Capital is more than:


 


(A)                              the
Target Net Working Capital minus the Seller Closing Payment, or


 


(B)                                the
Target Net Working Capital plus the Purchaser Closing Payment,


 


the Purchase Price shall be increased by an
amount (the “Purchase Price Increase Amount”)
equal to:


 


(I)            in
the case of clause (A), (x) the sum of the Final Net Working Capital plus
the Seller Closing Payment, minus (y) the Target Net Working Capital, or


 


(II)        in
the case of clause (B), (x) the difference between the Final Net Working
Capital minus the Purchaser Closing Payment, minus (y) the Target Net
Working Capital,


 


and Purchaser shall, on the Final
Determination Date, pay to Seller in immediately available funds the Purchase
Price Increase Amount.


 


(iii)       For
purposes of this Section 2.4, “Final Determination Date”
means the date that is two Business Days after the Final Net Working Capital
calculation is delivered unless the calculation is disputed in accordance with Section 2.4(d),
in which case the Final Determination Date means within two Business Days of
the date that the Final Net Working Capital is finally determined pursuant to Section 2.4(d).


 


7

















 


(e)           Seller
shall have a period of five calendar days from the date it receives the Final
Net Working Capital calculation in which to review the same.  For the purpose of such review, Purchaser
agrees to cause its auditors to permit Seller and its authorized
representatives to examine all working papers, schedules and other documentation
used or prepared by Seller’s auditors. 
If no objection to the Closing Financial Statements is given by Seller
to Purchaser within such five-day period, the calculation shall be deemed to
have been approved as of the last day of such five-day period.


 


(i)             If
Seller objects to the calculation within such five-day period by giving notice
to Purchaser setting out in reasonable detail the nature of such objection, the
parties agree to attempt to resolve the matters in dispute within 10 days from
the date Seller gives such notice to Purchaser. 
If all matters in dispute are resolved by the parties, the calculation
shall be modified to the extent required to give effect to such resolution and
shall be deemed to have been approved as of the date of such resolution.


 


(ii)          If
the parties cannot resolve all matters in dispute within such 10-day period,
all unresolved matters shall be submitted to the Canadian national office of
Ernst & Young (the “Arbitrator”)
for resolution, and the Arbitrator shall be given access to all materials and
information reasonably requested by it for such purpose.  The rules and procedures to be followed
in the arbitration proceedings shall be determined by the Arbitrator in its
discretion.  The Arbitrator’s
determination of all such matters shall be final and binding on both parties
and shall not be subject to appeal by either party.  The fees and expenses of the Arbitrator shall
be borne equally by the parties unless the Arbitrator determines that the
overall position taken by one of the parties was unreasonable and without
material merit, in which case the Arbitrator may require such party to pay all
of the costs of the arbitration.  The
Final Net Working Capital calculation shall be modified to the extent required
to give effect to the Arbitrator’s determination and shall be deemed to have
been approved as of the date of such determination.


 


2.5                               Allocation
of Purchase Price; Taxes


 


(a)                                  The
Purchase Price will be allocated in accordance with Schedule 2.5, which
Schedule shall be modified as appropriate to reflect the adjustments to the
Purchase Price contemplated in Section 2.4.


 


(b)                                 Seller
and Purchaser, in filing their respective income tax returns, will use the
allocations of the Purchase Price as set forth in Schedule 2.5.


 


(c)                                  Purchaser
and Seller shall file all applicable transfer tax forms and declarations in
connection with the transactions contemplated hereby.  All Taxes applicable to the Assets for
periods beginning before and ending after the Closing Date, and any other charges
which are appropriate subjects for proration, shall be prorated on a daily
basis as of 12:01 a.m. on the Closing Date between Seller and


 


8
















 


Purchaser;
provided, however, that all 2008 property, ad valorem or
similar Taxes shall be allocated to Seller for the period (or partial periods)
ending on the Closing Date based on a daily proration of the most recent (as of
the Closing Date) ascertainable property, ad valorem or
similar Taxes to be prorated.  Any amount
of 2008 property, ad valorem or similar Taxes not
allocated to Seller shall be allocated to Purchaser.  Any refund of 2008 property, ad valorem or similar Taxes (net of costs incurred to
recover same) shall be prorated between Seller and Purchaser in the same
proportion.


 


2.6                               Section 85
Election


 


Seller and Purchaser shall jointly elect
under subsection 85(1) of the Income Tax Act
(Canada) (the “ITA”), in prescribed form and
within the time provided in subsection 85(6) of the ITA, that Seller’s
proceeds of disposition and Purchaser’s cost of each asset transferred be such
amounts as are set out in Schedule 2.6, which Schedule shall be modified as
appropriate to reflect the adjustments to the Purchase Price contemplated in Section 2.4.


 


2.7                               Instruments
of Conveyance


 


In order to
effectuate the sale, assignment, transfer and conveyance of the Assets, the
Seller has, or has caused its Affiliates to, execute and deliver to Purchaser
at the Time of Closing:


 


(a)                                  one
or more bills of sale; and


 


(b)                                 such
other instruments of conveyance and other documents as Purchaser has reasonably
deemed necessary or appropriate to vest in, or confirm to, Purchaser title to
all of the Assets as contemplated by this Agreement.


 


ARTICLE 3 – REPRESENTATIONS AND WARRANTIES


 


3.1                               Seller’s
Representations and Warranties


 


Seller represents
and warrants to Purchaser as follows and acknowledges that Purchaser is relying
on such representations and warranties in connection with its consummation of
the transactions contemplated hereby:


 


(a)                                  Due
Incorporation and Authority


 


Seller is an
unlimited company duly incorporated, validly existing and in good standing with
respect to filing its annual returns under the laws of the Province of Nova
Scotia and has all requisite corporate power and capacity to own, lease and
operate its assets, properties and business and to carry on its business as
currently conducted.


 


(b)                                 Authority
to Execute and Perform Agreement


 


Seller has all
requisite corporate power and capacity to enter into, execute and deliver this
Agreement and to perform its obligations hereunder.  This Agreement and the other documents 


 


9

















 


and agreements
being delivered by Seller hereunder have been duly authorized, executed and
delivered by Seller and (assuming the due authorization, execution and delivery
of this Agreement and the documents and agreements to be delivered by Seller
hereunder by the other parties thereto and the validity and binding effect
hereof and thereof on such other parties) are valid and binding obligations of
Seller, as applicable, enforceable against Seller in accordance with their
terms.


 


(c)                                  Compliance
with Laws


 


Except as set
forth on Schedule 3.1(c), there are no current material violations of any
Applicable Law relating to the Assets.


 


(d)                                 No
Breach


 


The execution,
delivery and performance by Seller of this Agreement and the other agreements
and documents required to be delivered by Seller under this Agreement, and the
consummation by Seller of the transactions contemplated hereby and thereby,
will not:


 


(i)    violate or result in the
breach of any provision of the constating documents of Seller or any resolution
of the board of directors (or any committee thereof) or shareholders of Seller;


 


(ii)   result in the creation or
imposition of any lien or other encumbrance upon any of the Assets (other than
any liens or encumbrances created by Purchaser); or


 


(iii)  violate any Applicable Law
in Canada applicable to Seller or any of the Assets.


 


(e)                                  Actions
and Proceedings


 


Except as set
forth on Schedule 3.1(e):


 


(i)    there are no outstanding
orders, judgments, injunctions, awards or decrees of any court, arbitrator or
other Governmental Authority against Seller or any of its Affiliates in respect
of any of the Assets; and


 


(ii)   there are no actions,
litigation or suits or legal, administrative or arbitral proceedings pending
or, to the knowledge of Seller, threatened against or affecting Seller or any
of its Affiliates in respect of any of the Assets at law or in equity or before
any federal, provincial, municipal or other Governmental Authority, domestic or
foreign, which could reasonably be expected to have a Material Adverse Effect.


 


(f)                                    Consents
and Approvals


 


The execution and
delivery by Seller of this Agreement and the other agreements and documents
required to be delivered by Seller under this Agreement, and the performance by



 


10

















 


Seller of its
obligations hereunder and thereunder, do not require Seller or its Affiliates
to obtain any consent, approval or action of, or make any filing with or give
any notice to, any Governmental Authority or any other Person.


 


(g)                                 Expropriation


 


No part of the
Assets has been taken or expropriated by any Governmental Authority, nor, to
Seller’s knowledge, are there any proposals to give any notice of or to
commence any proceedings for expropriation or taking.


 


(h)                                 Title
to Assets


 


As of the Time of
Closing, Seller will have title to the Assets free and clear of any lien or
other encumbrance other than carriers’, mechanics’, warehousemen’s, suppliers’,
repairers’, storers’ or similar possessory liens or encumbrances arising in the
ordinary course of business of the Pulp Business.


 


(i)                                     Taxes


 


(i)    Seller has duly filed on a
timely basis all tax returns required to be filed by it and has paid or
remitted (in the case of goods and services tax, harmonized sales tax or other
sales tax) all Taxes which are due and payable, and all assessments,
reassessments, governmental charges, penalties, interest and fines due and
payable by it.  Seller has made adequate
provision for Taxes payable for the current period and any previous period for
which tax returns are not yet required to be filed.  There are no actions, suits, proceedings,
investigations or claims pending or, to the knowledge of Seller, threatened
against Seller in respect of Taxes, governmental charges or assessments, nor
are any material matters under discussion with any Governmental Authority
relating to Taxes, governmental charges or assessments asserted by any such
authority.  Seller has withheld from each
payment made to any of its past or present employees, officers or directors,
and to any non-resident of Canada, the amount of all Taxes and other deductions
required to be withheld therefrom, and has paid the same to the proper Tax or
other receiving officers within the time required under any applicable
legislation.


 


(ii)   Seller is not a non-resident
of Canada for the purposes of the Tax Act.


 


(j)                                     Location
of Assets


 


With the
exception of inventory in transit, all the tangible assets comprising the
Assets are situate at the locations set out in Schedule 3.1(j).


 


11

















 


(k)                                  Inventories


 


Since December 31,
2007, the inventories comprising part of the Assets have been maintained and
accounted for in the ordinary course of business consistent with past practice
and GAAP.


 


(l)                                     Accounts
Receivable


 


All accounts
receivable, book debts and other debts due or accruing to Seller in connection
with the Pulp Business are, to Seller’s knowledge, bona fide
and good and, subject to an allowance for doubtful accounts which have been
reflected on the books of Seller in accordance with GAAP, collectible without
set-off or counterclaim (excluding any accounts receivable associated with
MacTara Limited, the material details of which Seller has provided to
Purchaser).


 


(m)                               Insurance


 


Schedule 3.1(m) sets
out all insurance policies (specifying the insurer, the amount of the coverage,
the type of insurance and the policy number) maintained by Seller on the Assets
as of the date hereof.


 


3.2                               Survival
of Seller’s Representations, Warranties and Covenants


 


The
representations and warranties and, to the extent they have not been fully
performed at or prior to the Time of Closing, the covenants of Seller contained
in this Agreement and any agreement, instrument, certificate or other document
executed or delivered pursuant hereto shall survive the Closing for a period of
18 months from and after the Closing Date and, notwithstanding such closing or
any investigation made by or on behalf of Purchaser, shall continue in full
force and effect for the benefit of Purchaser during such period, except that:


 


(i)    the representations and
warranties set out in Section 3.1(h) shall survive and continue in
full force and effect without limitation of time;


 


(ii)   the representations and
warranties set out in Section 3.1(i) shall survive and continue in
full force and effect until 90 days after the expiration of the period, if any,
during which an assessment, reassessment or other form of recognized written
demand assessing liability for tax, interest or penalties under applicable tax
legislation in respect of any taxation year to which such representations and
warranties extend could be issued under such tax legislation; and


 


(iii)  a claim for any breach of
any of the representations and warranties contained in this Agreement or in any
agreement, instrument, certificate or other document executed or delivered
pursuant hereto involving fraud or fraudulent misrepresentation may be made at
any time following the Time of Closing, subject only to applicable limitation
periods imposed by law.


 


12

















 


3.3                               Purchaser’s
Representations and Warranties


 


Purchaser
represents and warrants to Seller as follows and acknowledges that Seller is
relying on such representations and warranties in connection with its
consummation of the transactions contemplated hereby:


 


(a)                                  Due
Incorporation and Authority


 


Purchaser is duly
incorporated, validly existing and in good standing with respect to filing its
annual returns under the laws of the Province of Nova Scotia and has all
requisite corporate power and capacity to own, lease and operate its assets,
properties and business and to carry on its business as currently conducted.


 


(b)                                 Authority
to Execute and Perform Agreement


 


Purchaser has all
requisite corporate power and capacity to enter into, execute and deliver this
Agreement and to perform fully its obligations hereunder.  This Agreement has been duly authorized,
executed and delivered by Purchaser and (assuming the due authorization,
execution and delivery of this Agreement by Seller and the validity and binding
effect hereof on Seller) is the valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms.


 


(c)                                  No
Breach


 


The execution,
delivery and performance by Purchaser of this Agreement and the consummation by
Purchaser of the transactions contemplated hereby will not:


 


(i)    violate or result in the
breach of any provision of the constating documents of Purchaser;


 


(ii)   violate, result in the
breach of, or default (or an event which, with notice or lapse of time or both,
would constitute a default) under, any material contract to which Purchaser is
a party or to which Purchaser or any of its assets or properties may be bound;
or


 


(iii)  to Purchaser’s knowledge,
violate any statute, law or regulation of any jurisdiction, which violation,
individually or in the aggregate, could have a material adverse effect on
Purchaser’s ability to consummate the transactions contemplated herein or the
performance of its obligations hereunder.


 


(d)                                 Consents
and Approvals


 


The execution and
delivery by Purchaser of this Agreement and the performance by Purchaser of its
obligations hereunder do not require Purchaser to obtain any consents,
approvals, authorizations, licenses, permits or other actions of, or make any
filings with, any Governmental Authority or any other Person.


 


13

















 


(e)                                  Actions
and Proceedings


 


There are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
arbitrator or other Governmental Authority against Purchaser, and there are no
actions, litigation or suits or legal, administrative or arbitral proceedings
of any type whatsoever pending, or to the knowledge of Purchaser, threatened,
against Purchaser which individually or in the aggregate could reasonably be
expected to adversely affect Purchaser’s ability to consummate the transactions
contemplated herein or the performance of its obligations hereunder.


 


(f)                                    Issued
Shares


 


The issuance of
the Issued Shares has been duly authorized and approved by all requisite
corporate, regulatory and other action, and the Issued Shares are validly
issued as fully paid common shares of Purchaser.


 


3.4                               Survival
of Purchaser’s Representations, Warranties and Covenants


 


The
representations, warranties and, to the extent they have not been fully
performed at or prior to the Time of Closing, the covenants of Purchaser set
forth in this Agreement will survive the Closing for a period of 18 months from
and after the Closing Date.


 


ARTICLE 4 – COVENANTS


 


The parties
hereto covenant and agree as follows:


 


4.1                               Governmental
Filings


 


As soon as
practicable after the execution of this Agreement, Seller and Purchaser shall
cooperate with each other and with their respective Affiliates and shall make
any and all filings and submissions to any Governmental Authority which are
required to be made in connection with the transactions contemplated
hereby.  Seller shall furnish to
Purchaser and its Affiliates and Purchaser shall furnish to Seller and its
Affiliates such information and assistance as the other parties may reasonably
request in connection with the preparation of any such notices, filings or
submissions.  Each party hereto agrees to
give the other parties hereto prompt written notice of any notification that it
receives from any Governmental Authority in connection with the transactions
contemplated hereby.


 


4.2                               Expenses


 


The parties to
this Agreement shall bear their own respective expenses incurred in connection
with the preparation, execution and performance of this Agreement, including
all fees and expenses of agents, representatives, counsel and accountants.  Purchaser shall bear the costs and expenses
associated with (a) any sales or use taxes, federal taxes and any other
taxes or duties payable by either party as a result of the transactions
contemplated hereby (excluding any gains taxes), (b) any recording costs
or transfer taxes resulting or arising from the transaction contemplated
herein, and (c) any fees, costs, attorneys’ fees or expenses required in
connection with filings with Governmental Authorities, in each case relating to
the Assets and the transactions contemplated hereby.


 


14

















 


4.3                               Indemnification
for Brokerage Commissions


 


(a)                                  Seller
represents and warrants to Purchaser that there are no brokerage commissions,
finder’s fees or similar fees or commissions payable in connection herewith on
account of Seller’s actions or the actions of any of its Affiliates.  Seller agrees to indemnify and save Purchaser
harmless from any claim or demand for commission or other compensation by any
broker, finder, agent or similar intermediary claiming to have been employed by
or on behalf of Seller, Neenah Paper, Inc. or any of their respective
Affiliates, and to bear the cost of any legal expenses incurred by Purchaser in
defending against any such claim.


 


(b)                                 Purchaser
represents and warrants to Seller that there are no brokerage commissions,
finders’ fees or similar fees or commissions payable in connection herewith on
account of Purchaser’s actions or the actions of its Affiliates.  Purchaser agrees to indemnify and save Seller
and its Affiliates harmless from any claim or demand for commission or other
compensation by any broker, finder, agent or similar intermediary claiming to
have been employed by or on behalf of Purchaser or any of its Affiliates and to
bear the cost of any legal expenses incurred by Seller or any of its Affiliates
in defending against any such claim.


 


4.4                               Further
Assurances


 


Seller and
Purchaser will from time to time execute and deliver all such further documents
and instruments and do all acts and things as the other party may, either
before or after the Closing Date, reasonably require to effectively carry out
or better evidence or perfect the full intent and meaning of this Agreement.


 


4.5                               Use
of Seller’s Trade Name


 


Purchaser shall
be entitled to use existing sales literature, inventories, packaging, office
supplies, and such other items bearing any of the trade names and trademarks of
Seller which are included in the Assets for a period of nine months from and
after the Closing Date.  Purchaser agrees
to cease using or delete such trade names and trademarks from such items as
soon as reasonably practicable after the Closing Date but in any event within
such nine-month period.


 


4.6                               Money
Received After Closing


 


If, at any time from and after the Closing,
Seller receives any payment or other money comprising or relating to the Assets
that Seller is not otherwise entitled to hereunder, Seller shall be deemed to
be holding such funds in trust for Purchaser and shall promptly upon receipt of
such funds deliver the same to Purchaser without deduction, set-off,
counterclaim or offset.


 


15

















 


ARTICLE 5 – CLOSING ARRANGEMENTS


 


5.1                               Closing


 


The sale and
purchase of the Assets will be completed at the Time of Closing on the Closing
Date at:


 


	
   

  	
  Stewart McKelvey Stirling Scales

  
	
   

  	
  Purdy’s Wharf Tower One

  
	
   

  	
  1959 Upper Water Street

  
	
   

  	
  Suite 900

  
	
   

  	
  Halifax, Nova Scotia B3J 2X2

  
	
   

  	
  Canada

  



 


ARTICLE 6 – GENERAL


 


6.1                               Time
of the Essence


 


Time is of the
essence of this Agreement.


 


6.2                               Public
Announcements


 


Neither Seller
nor Purchaser shall make any publicity release or announcement concerning this
Agreement, or make any disclosure with respect to the consideration paid
pursuant to this Agreement, or the transactions contemplated hereby without the
prior written approval thereof by Purchaser or Seller, as the case may be,
except as required by Applicable Law, in which case the party issuing the release
or making such disclosure shall so advise the other party in writing in advance
of such issuance or disclosure.


 


6.3                               Benefit
of the Agreement


 


This Agreement
will inure to the benefit of and be binding upon the respective heirs,
executors, administrators, successors and permitted assigns of the parties
hereto.


 


6.4                               Third
Party Beneficiaries


 


The provisions of
this Agreement are solely for the benefit of the parties hereto and their
respective Affiliates, successors and permitted assigns and shall not confer
upon any third Person any remedy, claim, liability, reimbursement or other
right in excess of those existing without reference to this Agreement.


 


6.5                               Entire
Agreement


 


This Agreement
(including the Schedules hereto) constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and cancels and
supersedes any prior understandings and agreements between the parties hereto
with respect thereto.  There are no
representations, warranties, terms, conditions, undertakings or collateral
agreements, 


 


16

















 


express, implied
or statutory, between the parties other than as expressly set forth in this
Agreement.


 


6.6                               Amendments
and Waivers


 


No amendment to
this Agreement will be valid or binding unless set forth in writing and duly
executed by each of the parties hereto. 
No waiver of any breach of any provision of this Agreement will be
effective or binding unless made in writing and signed by the party purporting
to give the same and, unless otherwise provided, will be limited to the
specific breach waived.


 


6.7                               Assignment


 


This Agreement
may not be assigned by any party hereto without the written consent of the
other parties hereto.


 


6.8                               Notices


 


Any demand,
notice or other communication to be given in connection with this Agreement
will be given in writing and will be given by personal delivery or by facsimile
communication addressed to the recipient as follows:


 


	
   

  	
  (i)

  	
  to Seller:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Neenah Paper Company of Canada

  
	
   

  	
   

  	
  3460 Preston Ridge Road, Suite 600

  
	
   

  	
   

  	
  Alpharetta, Georgia 30005

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Steven S. Heinrichs

  
	
   

  	
   

  	
   

  	
  Senior Vice President, General Counsel
  and Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
  678-518-3283

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  to Purchaser:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Azure Mountain Capital Financial Corporation

  
	
   

  	
   

  	
  c/o Blue Wolf Capital Management

  
	
   

  	
   

  	
  48 Wall Street

  
	
   

  	
   

  	
  31st Floor

  
	
   

  	
   

  	
  New York, New York  10005

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Josh Wolf-Powers

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
  646-349-2280

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and with a copy to:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Azure Mountain Capital Financial
  Corporation

  
	
   

  	
   

  	
  c/o Davies Ward Phillips &
  Vineberg LLP

  
	
   

  	
   

  	
  1 First Canadian Place

  
	
   

  	
   

  	
  100 King Street West

  
	
   

  	
   

  	
  Suite 4400, Box 63

  
	
   

  	
   

  	
  Toronto, Ontario  M5X 1B1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  Gillian Stacey

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  	
  416-863-0871

  
							



 


17

















 


or to such other address, individual or electronic communication number
as may be designated by notice given by either party to the other.  Any demand, notice or other communication
given by personal delivery will be conclusively deemed to have been given on
the day of actual delivery thereof and, if given by facsimile communication, on
the day of transmittal thereof if given during the normal business hours of the
recipient and on the Business Day during which such normal business hours next
occur if not given during such hours on any day if receipt of such facsimile
communication is confirmed.


 


6.9                               Remedies
Cumulative


 


The rights and
remedies of the parties hereunder are cumulative and are in addition to, and
not in substitution for, any other rights and remedies available at law or in
equity or otherwise.  No single or
partial exercise by a party of any right or remedy precludes or otherwise
affects the exercise of any other right or remedy to which that party may be
entitled.


 


6.10                        Governing
Law


 


This Agreement is
governed by and will be construed in accordance with the laws of the Province
of Nova Scotia and the federal laws of Canada applicable therein.


 


6.11                        Attornment


 


For the purpose
of all legal proceedings, this Agreement will be deemed to have been performed
in the Province of Nova Scotia and the courts of the Province of Nova Scotia
(and all courts competent to hear appeals therefrom) will have exclusive
jurisdiction to entertain any action arising under this Agreement.  Seller and Purchaser each hereby attorns to
the jurisdiction of the courts of the Province of Nova Scotia and all courts
competent to hear appeals therefrom.


 


6.12                        Counterparts


 


This Agreement
and any amendment, supplement, restatement or termination of any provision of
this Agreement may be executed and delivered in any number of counterparts,
each of which when executed and delivered is an original but all of which taken
together constitute one and the same instrument.


 


[The next page is the signature page.]


 


18

















 


IN WITNESS WHEREOF the parties have executed
this Agreement.


 


 


	
  AS SELLER

  	
  NEENAH
  PAPER COMPANY OF CANADA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:Sean Erwin

  
	
   

  	
   

  	
   

  	
  Title:President and Chief Executive Officer

  



 


 


	
  AS PURCHASER

  	
  AZURE
  MOUNTAIN CAPITAL FINANCIAL 

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Sean Erwin

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  



 


Signature page for Finance Asset Purchase Agreement


 


19